Hello and welcome to Money Girl’s Quick and Dirty Tips for a Richer Life.

Tax season is here! Today’s topic is whether to prepare your own tax return or hire a pro.

Several of you have e-mailed me asking whether you should prepare your tax returns yourself or hire a tax professional. The answer depends on your own tax situation and your personal preference.

Here are a few suggestions: If your tax situation is straightforward and you’re comfortable doing so, you might choose to prepare your taxes yourself. Programs such as TurboTax come in very handy and work well, even for more complicated returns in most cases. Tax prep programs guide you through filling out your returns in an interview style where you simply answer the questions you’re asked. The programs also allow you to enter your information directly into tax forms.

The IRS website has answers to frequently asked tax questions. You can also call the IRS toll free at 1-800-829-1040 for help with your tax questions.

If your tax situation is complicated, or you have a lot of questions or need specialized advice, it can make sense to hire an experienced and knowledgeable tax professional. For example, if you own your own business, have rental properties, or had a major change in your financial life in 2006, the advice and know-how of a professional can potentially save you time, headaches, and money.

Two other good reasons to hire a professional are (1) if you don’t have time to do your own taxes, or (2) if the last thing you’d ever want to do is fill out those forms yourself!

Even if you prepare your returns yourself, it’s still possible to hire a professional for a consultation. You might want to do this if you’re comfortable preparing your own returns, but want specific advice or to strategize about optimizing next year’s taxes.

Keep in mind that the expertise and skill level of tax professionals varies greatly. If your return is simple, an experienced tax preparer can get the job done efficiently. For more complex returns, a CPA or Enrolled Agent may be your best bet. Certified Public Accountants are licensed by the state and Enrolled Agents are licensed by the federal government.

Referrals can be a great way to find a capable tax pro. Ask friends, family members, or colleagues whose opinion you value for their recommendations. And if your tax situation calls for a professional with specialized knowledge, ask people who have a tax situation similar to yours for a referral.

If you do decide to use a pro, you’ll want to meet with them as soon as possible, especially if you’re expecting a refund and don’t want to file an extension.

Whether you do your own taxes or use a pro, getting organized up front will save you time and hassles. If you haven’t already gathered together the documents you’ll need for your 2006 tax returns, now is definitely the time to do it.

To get organized, you’ll want to create a file and put the documents you’ll need in it. At the end of the transcript for this episode at quickanddirtytips.com, I’ve provided a list of the main documents you’ll want to gather up to get organized for tax time. This list applies to U.S. tax returns and, while it isn’t comprehensive, it will get you well on your way to having what you need at your fingertips.

After you’ve finished gathering up the documents you need for your 2006 returns, create a new folder for the information you’ll want to collect for 2007. Making a habit of putting tax-related receipts and paperwork in this file throughout the year will make it much easier when you’re getting organized for tax time next year.

I’ve posted a poll at quickanddirtytips.com, asking whether you plan to use a tax preparer or prepare your tax returns yourself. To take the poll, visit the Money Girl section of quickanddirtytips.com.

While you’re there, also take the audience survey.

Today, I’m giving away another book. If you’ve sent me an email or posted to the blog, you’re automatically entered in the give-away. This week, the winner is Dean H. in New York City. Congratulations, Dean! You’ve won a copy of Get a Financial Life: Personal Finance in Your Twenties and Thirties by Beth Kobliner. Please check your email for instructions. This book has a lot of helpful information for younger people who want to take control of their finances. It covers personal finance basics, such as managing debt, investing in mutual funds and stocks, and buying your first condo or house.

Thanks again to everyone who has taken the time to post a review at iTunes. If you haven’t posted a review, please take a moment to write one. I’d really appreciate it!

Cha-ching! That's all for now, courtesy of Money Girl, your guide to a richer life.

If you have a question or comment, email it to money@quickanddirtytips.com. Also, check out the newest Quick and Dirty Tips podcasts: Legal Lad and The Mighty Mommy. Thanks for listening!

Get Organized! Documents You’ll Need for Tax Time

The list applies to U.S. tax returns. The list isn’t comprehensive, but will get you well on your way to having what you will need at your fingertips.

• Your 2005 tax return.
• Documents showing the income you earned for the year, including income earned as an employee, as an independent contractor, or from dividends and interest. These forms include:
  • W-2s
  • 1099 forms (for miscellaneous, interest, and dividend income, for example)
• If you’re a homeowner, any 1098 forms you received (these forms show the mortgage interest you paid for the year) and your 2006 property tax statement.
• Schedule K-1s (income/loss from partnerships, S corporations, etc.).
• Brokerage statements showing sales of stocks, bonds, or mutual funds.
• Closing statements for any real estate transactions.
• A copy of fees you paid for automobile registration.
• Records of charitable contributions.
• Records of contributions you made to an IRA or self-employed retirement plan.
• Medical expenses.
• Student loan interest.
• Moving expenses for a job-related move.
• Records of educational expenses.
• Job-related expenses.
• Record of what you paid for tax preparation in 2006, including the cost of tax software, tax books, and electronic filing fees.